"Terrorist data" shows its power and US dollar bulls are encouraged.

The U.S. dollar rose significantly on Thursday (April 18). The U.S. retail sales data, known as "horror data", performed strongly. In addition, the number of initial jobless claims in the U.S. dropped to the lowest level in nearly 50 years last week. The strong U.S. economy The data gave the dollar a boost, while weak European data weighed on the euro. In the gold market, although spot gold prices have stopped falling for several consecutive days, analysts said that the outlook for gold prices is still not optimistic. The performance of U.S. economic data and trade issues will be factors that investors need to pay attention to in the short term.

Strong U.S. retail sales, dollar sharply higher

According to data released by the U.S. Department of Commerce on Thursday, U.S. retail sales in March hit the largest increase since September 2017, and sales of cars and gas stations surged, indicating that consumers are providing greater support to the U.S. economy.

Data showed that U.S. retail sales increased by 1.6% monthly in March, and the data for a 0.2% decrease in February was not revised. The results were higher than all economists surveyed by Bloomberg forecast; their median forecast was for growth of 1%. Retail sales data is an important indicator of U.S. consumption, and the stronger-than-expected data reflects the solidity of the U.S. economy.

Because the Federal Reserve emphasizes that interest rate decisions will depend on economic data, and consumer spending accounts for about 70% of U.S. economic output, U.S. retail sales data often set off "turbulent waves" in financial markets, so they are called "terror data."

Retail sales data point to stronger U.S. economic activity this quarter. After the data was released, institutions have raised their first-quarter GDP growth forecasts: ING Bank said that due to the strong rebound in U.S. retail sales data in March and the unemployment rate falling to a record low again, the U.S. first-quarter GDP growth is expected to be released next week. Fast data recorded 2.5%; JP Morgan raised its economic forecast for the real GDP of the United States in the first quarter to 2.9%, previously expected to be 2.0%; Goldman Sachs raised the U.S. economic growth tracking indicator for the first quarter from 2.1% to 2.4%; Atlanta Fed GDPNowcast model It shows that the U.S. economic growth in the first quarter is expected to be 2.8%, compared with the previous expectation of 2.4%.

Another report released by the U.S. Department of Labor on Thursday showed that initial jobless claims fell to a 49-year low last week. Data showed that the number of people filing for unemployment benefits in the United States for the week of April 13 was 192,000, slightly lower than the expected 205,000. The previous value was revised up to 197,000. The data has fallen for five consecutive weeks, indicating that U.S. employment conditions remain strong.

After the release of these two important U.S. economic data, the U.S. dollar rebounded across the board, with the ICE U.S. Dollar Index hitting 97.42 after the data was released. The ICE U.S. Dollar Index rose further during the New York session, hitting a maximum of 97.50.

In late trading in New York on Thursday, the Bloomberg U.S. Dollar Spot Index rose about 0.4%, its largest one-day gain since March 21; so far this week, the index has risen about 0.5%, close to recovering the losses from the previous week.

Weak euro zone data weighed on the euro. The preliminary performance of the euro zone's April manufacturing and services PMIs were both lower than expected, especially the weak rebound in Germany's manufacturing industry, which made the market worried about the economic prospects of the euro zone.

In late trading in New York on Thursday, EUR/USD fell about 0.6% to 1.1231, and hit an intraday low of 1.1226 after the New York market was fixed.

Better-than-expected retail sales data also boosted sentiment on Wall Street. U.S. stocks edged higher ahead of the long holiday weekend. The S&P 500 topped 2,900 on Thursday.

The S&P 500 rose 0.2% to 2,905.03 points; the Dow Jones Industrial Average rose 0.4% to 26,559.54 points. U.S. stocks will be closed on Friday due to Good Friday.

"The retail sales data adds some color to the slightly positive tone of recent data and provides some comfort that the economy has not fallen off a cliff," Andrew Hunter, senior U.S. analyst at Capital Economics, wrote in a note.

The golden “hard days” are probably still to come

Spot gold closed slightly higher on Thursday, halting five consecutive losses, but still running below the $1,280/ounce mark. Spot gold prices in the U.S. market reached a maximum of $1,277.57 per ounce and closed at $1,275.40 per ounce.

June gold futures on the New York Mercantile Exchange closed down 0.1% at $1,276 per ounce on Thursday; gold futures prices fell for the fourth consecutive week, the longest losing streak for the main contract since August 17.

Gold prices have experienced a sharp sell-off this week, with analysts fearing things could get worse before they get better.

Daniel Ghali, commodity strategist at TD Securities, said rising stocks and a stronger U.S. dollar have kept gold investors on the sidelines.

Better-than-expected economic growth and industrial output in China earlier this week hit safe-haven demand for gold.

Data released by the China Bureau of Statistics on Wednesday showed that China's gross domestic product (GDP) grew by 6.4% year-on-year for the first time, better than the expected increase of 6.3% and similar to the previous quarter. China's industrial output jumped 8.5% year-on-year in March, much higher than the 5.9% expected growth. In addition, China's total retail sales of consumer goods in March increased by 8.7% year-on-year, and analysts expected an increase of 8.4%.

Another factor that investors need to pay close attention to is that gold's uptrend has been broken, which means that from a technical perspective, gold prices may continue to move lower before rebounding.

Ghali said: "Gold prices have broken out of the upward trend formed from the lows in November last year. They are now in a downward trend and gold prices will go lower next week."

Colin Cieszynski, chief market strategist at SIA Wealth Management, said that the current momentum of gold prices is to trend lower. This is a seasonally weak time of year for gold, which may last until August.

Analysts are focusing on gold price levels between $1,250/ounce and $1,300/ounce.

Ghali said: "On the downside, I am very concerned about $1,250/ounce. On the upside, I think $1,300/ounce may be worthy of attention."

Cieszynski, who is also bearish on gold next week, pointed to $1,282 per ounce as initial resistance, followed by $1,300 per ounce. He also said that on the downside, he is paying attention to the 200-day moving average level of $1,250 per ounce.

Ross Strachan, senior commodities economist at Capital Economics, pointed out that investors should not forget the Sino-US trade negotiations. "For markets, including gold, the final agreement or the collapse of negotiations could be a major turning point for the market," he said.

U.S. President Trump said on Wednesday that he believed the Sino-U.S. trade talks would be "successful," Bloomberg reported. Trump said at a White House event that negotiations between China and the United States are "going smoothly" and people should hear relevant news "very soon."

Trump said on April 4 that China and the United States may need four weeks to formulate the framework of the agreement, and then another two weeks to implement the details of the agreement.

Bloomberg wrote on Wednesday that gold prices are falling sharply and investors are fleeing the world's largest gold exchange-traded funds (ETFs). Demand for gold as a safe-haven asset has been weakened as investors remain optimistic about U.S.-China trade negotiations and as worries about global economic growth prospects ease.

The size of gold held by SPDR Gold Shares fell to its lowest level since October last year on Tuesday. According to Bloomberg statistics, the asset size of the SPDR Gold Trust has fallen nearly 9% from a seven-month high hit in January.

Peter Hug, global head of trading at Kitco Metals, said on Wednesday that the decline in gold prices is not over yet, especially in the short term. "If you were to ask me if there is any chance of further declines in this market, from a technical perspective, I can only say yes," Hug told Kitco News.

CMC Markets market analyst David Madden said he expects gold prices to fall another $10 or $15 in the near future.

Todd Horwitz, chief strategist at Bubbatrading.com, said on Thursday that gold prices need to remain above key support levels for several trading days to consolidate the bottom, otherwise gold prices will fall further.

"Continuing signs that the U.S. economy and the global economy are actually on the path to recovery from the growth scare earlier this year are, in turn, having a negative impact on gold prices," TD Securities strategist Daniel Ghali said on Thursday.

Ghali added that the opportunity cost of holding assets that do not generate cash flows, such as gold, is rising.

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